BMG has just reported its strongest ever financial results, surpassing USD $1 billion in annual revenues for the first time in 2024.
The Bertelsmann-owned music company generated EUR €963 million (USD $1.04bn) last year, up 6.4% YoY (or 8.1% on an organic basis).
What stands out most in the numbers: BMG’s adjusted operating EBITDA hit an all-time high of EUR €265 million ($287m), up a substantial 37% YoY compared to the prior year’s €194 million.
That EBITDA surge helped the company achieve a record 27.5% margin in 2024, up significantly from 21.4% in 2023.
These results represent the second year under Thomas Coesfeld‘s tenure as BMG CEO, a period that has seen significant structural changes as part of the company’s “BMG Next” strategy.
Key developments in 2024 included BMG moving its digital distribution in-house for major platforms like Spotify and Apple Music, while shifting physical distribution to Universal Music Group – all while investing EUR €243 million ($263m) in acquiring music catalogs.
BMG also continued to sign and break frontline acts last year, with notable successes including Jelly Roll (who earned his first Billboard 200 No.1 with Beautifully Broken) and Kylie Minogue (who reached No.1 on the UK album chart for the tenth time with Tension II).
On the publishing side, BMG writers contributed to global hits like Eminem’s Houdini, and 13 songs on Beyoncé’s Grammy Award-winning album Cowboy Carter.
Here, in his first interview since the results were announced, Coesfeld talks to MBW about BMG’s record-breaking year, its music catalog investments amid a shifting market, and what’s next for one of the world’s largest music companies…
BMG just reported its strongest results ever – with EBITDA up 37% to €265 million and revenue surpassing $1 billion. What were the key factors driving this performance?
One is Bertelsmann’s investment strategy, Boost. To your point, we invested a lot into catalog – 2024 was one of the years with the highest investments [so far from BMG].
Another thing is our ‘BMG Next’ strategy. Especially, our in-sourcing of Spotify and Apple Music [distribution] is really paying off. We monetize our repertoire much better, and we provide better services for our songwriters and artists.
“We monetize our repertoire much better, and we provide better services for our songwriters and artists.”
Also, our [new] structure, which is flatter and more effective, makes us faster and accelerates decision-making.
And lastly, we had a very successful year in frontline. We had Kylie Minogue, Jelly Roll, Lainey Wilson; we actually had a number one album in the same week in the US with Jelly Roll and in the UK with Kylie Minogue. That makes me very proud.
HITTING THE $1 BILLION REVENUE MILESTONE MUST FEEL SIGNIFICANT. IS THAT MORE THAN JUST A NUMERICAL ACHIEVEMENT FOR BMG?
We have very much focused on this milestone [in recent years], as you know. More than anything else, it’s a qualitative milestone because it clearly shows our ability to deliver globally.
It’s about our capability to deliver globally and to facilitate successes in publishing and recorded music, catalog and frontline. Those are the capabilities that matter.
Also, our ability to have meaningful discussions with the DSPs – that’s important. Obviously you need [to be] a certain size for that, and we keep growing.
BMG INVESTED €243 MILLION ($263M) IN MUSIC CATALOGS LAST YEAR – A SIGNIFICANT NUMBER DURING A PERIOD WHEN MANY HAVE SUGGESTED THE CATALOG ACQUISITION MARKET IS COOLING. WHAT MAKES AN ATTRACTIVE CATALOG ACQUISITION FOR BMG THESE DAYS?
Nothing has really changed: We look for good music – that’s it. Obviously, it’s about cultural relevance, the quality of the music, and its potential across different channels and genres.
It’s important to remember BMG is not a financial investor; we are a fully integrated music company across publishing and recorded music.
“BMG is in it for the long run. We’re not flipping these assets… We believe in music. For us, it’s not an ‘asset class’ – it’s in our DNA.”
What makes us unique, and what’s important when I talk to artists and songwriters, especially when we’re talking about acquiring their lifetime’s work, is that BMG is in it for the long run. We’re not flipping these assets. We are the trusted home when an artist or songwriter wants to find a genuine partner.
We believe in music. For us, it’s not an ‘asset class’ – it’s in our DNA. We’re building a portfolio of amazing repertoire that has helped define decades of music, and so far, we’ve been quite successful in doing so.
The share of US revenues in BMG’s numbers has dipped slightly, from 51.5% in 2023 to 49.6% in 2024. Are there any geographic trends in terms of BMG’s international ambitions that are worth noting?
Looking at market growth trends, you see high streaming volume growth rates outside of so-called ‘Western’ markets; [faster percentage] growth is happening in South America, Southeast Asia, and India. Africa is picking up too, more so than expected.
Obviously, we are looking at these high-growth markets. But the US and Europe remain our ‘head and heart’ – our center, in a way.
THE IFPI JUST RELEASED ITS GLOBAL MUSIC REPORT FOR 2024, WITH SOME CONCERNING HEADLINE NUMBERS BUT DECENT YoY SUBSCRIPTION GROWTH. WHAT’S YOUR PERSPECTIVE ON THE HEALTH OF THE MUSIC MARKET RIGHT NOW?
If you look at subscription revenue growth, it’s quite healthy. If you look at overall growth, it looks at face value, a little concerning. But much of [the industry-wide figures] on the recording side in 2024 was an anomaly due to [bigger than usual] vinyl sales and physical sales in 2023, which led to a huge swing in physical [last year].
“The age of double-digit growth in subscription streaming revenues is over, but still – this is a highly attractive market.”
If you normalize for that, the market is healthy. However, we all know that we have entered a new growth phase in streaming. The age of double-digit growth in subscription streaming revenues is over, but still – it’s a highly attractive market.
We still have attractive growth fundamentals, which obviously inform our strategy.
GIVEN SPOTIFY’S COMING ‘MUSIC PRO’ TIER AND THE VARIOUS PRICE INCREASES WE’VE SEEN in the past two years, ARE YOU CONFIDENT THERE’S STILL ROOM FOR UPWARD MOVEMENT IN SUBSCRIPTION STREAMING PRICING?
If you compare the price of music to the price of movies or streaming platforms, I think there’s still room to go.
“yes, there’s room for more.”
What we’ve seen over the past one and a half years of price increases is no concerning churn figures among subscribers. So yes, there’s room for more.
WHAT ARE BMG’S STRATEGIC PRIORITIES FOR 2025?
The focus for 2025 is on growth. To your point, [general] market growth is coming down, so it’s even more important to identify market segments that are growing.
Tied into that is obviously technology – understanding gen-AI and ensuring it’s embedded into our business processes, [like] marketing and royalty collection, or revenue assurance as we call it. Those are very music-specific use cases [for AI] that we will, and already are, scaling up.
THE BERTELSMANN annual REPORT MENTIONS “GROWING RISKS IN CONNECTION WITH THE USE OF ARTIFICIAL INTELLIGENCE” AND “INADEQUATE REGULATORY CONDITIONS” AS CONCERNS. HOW OPTIMISTIC ARE YOU ABOUT IMPROVEMENTS IN THE REGULATORY FRAMEWORK AROUND AI?
The playing field is shifting, and we will keep advocating for copyrights and IP to be monetized and remunerated fairly.
That’s essential, and there’s a broader societal interest at stake; it’s important to have creativity rewarded, especially in an age when artificial intelligence is generating creative work.
This is part of BMG’s DNA, and we will continue to champion IP protection and the value of human creativity.
ANY FINAL THOUGHTS ON BMG’S POSITION AS YOU MOVE further INTO 2025?
We had a good year in 2024 – a time when the music industry experienced significant changes.
At BMG, it’s important that we’ve adapted to this new reality, because greater profitability makes us more sustainable and creates opportunities to grow: to invest in our own people, in our songwriters and artists, and in technology.
We’re excited about the future and all we hope to achieve with our artists, songwriters and partners.Music ComeOn